Retail Sales Declined In June

ONS data reveals retail sales fell again in June, despite hopes that the Platinum Jubilee celebrations would help to offset reduced spending amid a cost of living crisis.

Key points:

>>> Retail sales volumes fell by 0.1% in June 2022 following a fall of 0.8% in May 2022 (revised from a fall of 0.5%); sales volumes were 2.2% above their pre-coronavirus (COVID-19) February 2020 levels, but down over the past year.

>>> Non-store retailing (predominantly online retailers) sales volumes fell by 3.7% in June 2022; sales volumes were 20.8% above their February 2020 levels.

>>> Automotive fuel sales volumes fell by 4.3% in June 2022 with retailers suggesting the fall was linked to record-high petrol and diesel prices impacting the amount of fuel people were buying.

>>> Non-food stores sales volumes fell by 0.7% over the month because of falls in clothing stores (negative 4.7%) and household goods stores (negative 3.7%), such as furniture stores.

>>> Food sales volumes rose by 3.1% with retailers confirming that increased sales were because of Queen’s Jubilee celebrations.

>>> The proportion of retail sales online fell to 25.3% in June, its lowest proportion since March 2020 (22.8%), continuing a broad downward trend since its peak in February 2021 (37.4%).

Responding to the latest ONS Retail Sales Index figures, Helen Dickinson, Chief Executive of the British Retail Consortium, said:

“The cost of living crunch caused by record inflation continue to damage consumer confidence and stifle household spending. Discretionary spending and particularly bigger purchases were put off as consumers become increasingly concerned about the future. As a result, furniture sales and white goods were particularly hard hit, while food sales held up a little better.

“Retailers are squeezed between higher costs and weaker demand, resulting in the most challenging trading period since the start of the pandemic. Retailers are playing their part to help households by absorbing as many of these costs as possible, expanding their value ranges, and offering discounts for some vulnerable groups. With the government consultation on the design of the Transitional Relief scheme for the 2023 ending today, there is a clear opportunity to remove some of the burden on retailers that limits their ability to absorb more of the incoming costs.”

Commenting on the Office of National Statistics retail sales figures for June 2022, Lisa Hooker, Industry Leader for Consumer Markets at PwC, said:

“While the decline in headline retail sales appears to have slowed down since May, June’s numbers confirm a worsening trend for the beleaguered sector. Excluding petrol, overall retail sales volumes fell by 6% compared to last year, with pounds in the till only really rising due to inflation, which has already risen to almost double digits.

The additional bank holidays in June may have encouraged consumers to stock up on food and drink for the Jubilee weekend – as confirmed by grocery stores being the only category outperforming – but will also have meant even fewer shopping days for other, more discretionary retail categories.

“Having only just recovered to pre-pandemic levels in May, fashion retailers were unable to maintain their momentum, with sales volumes falling back by almost 5%. So, despite upcoming summer holidays and social events postponed from the last two years finally going ahead, it seems like some consumers are content to make do with existing outfits rather than buying new ones.

“As in previous months, online sales growth continues to fall back from its pandemic highs in nearly every category. At just over a quarter of total retail sales, online participation is almost in line with where it would have been, had it not seen a boom during the last two years’ lockdowns.

“This month’s results make stark – and bleak – reading for retailers, as the inevitable outcome of rapidly falling consumer confidence and the cost-of-living crisis cause British consumers to tighten their wallets.

“It’s difficult to imagine any let up in these pressures for the rest of the year, with the proposed energy price cap rise in Autumn and food price inflation continuing to be passed through. It’s unlikely that any category of discretionary spending will be spared by the crisis, so retailers will be buckling up for a bumpy ride in the run-up to the all-important Christmas trading period; some casualties along the way may be unavoidable.”

Source : ONS, BRC, PwC